Healthcare financing reform in Latvia: switching from social health insurance to NHS and back?

Abstract

In the 1990s, Latvia aimed at introducing Social Health Insurance (SHI) but later changed to a National Health Service (NHS) type system. The NHS is financed from general taxation, provides coverage to the entire population, and pays for a basic service package purchased from independent public and private providers. In November 2013, the Cabinet of Ministers passed a draft Healthcare Financing Law, aiming at increasing public expenditures on health by introducing Compulsory Health Insurance (CHI) and linking entitlement to health services to the payment of income tax. Opponents of the reform argue that linking entitlement to health services to the payment of income tax does not have the potential to increase public expenditures on health but that it can contribute to compromising universal coverage and access to health services of certain population groups. In view of strong opposition, it is unlikely that the law will be adopted before parliamentary elections in October 2014. Nevertheless, the discussion around the law is interesting because of three main reasons: (1) it can illustrate why the concept of SHI remains attractive - not only for Latvia but also for other countries, (2) it shows that a change from NHS to SHI does not imply major institutional reforms, and (3) it demonstrates the potential problems of introducing SHI, i.e. of linking entitlement to health services to the payment of contributions.

Keywords: Baltic states; Health care reform; Health policy; Healthcare financing; Insurance.